Elon Musk’s xAI makes bold move with secretive AI video startup takeover

xAI, the AI company founded by the tech billionaire Elon Musk, has acquired a new startup specialising in artificial intelligence (AI)- powered video generation tools called “Hotshot.”

The acquisition was announced by Hotshot's CEO and co-founder, Aakash Sastry, in a post on X (formerly Twitter).

“Over the past 2 years we’ve built 3 video foundation models as a small team — Hotshot-XL, Hotshot Act One, and Hotshot,” the post reads.

“Training these models has given us a look into how global education, entertainment, communication, and productivity are about to change in the coming years. We’re excited to continue scaling these efforts on the largest cluster in the world, Colossus, as a part of xAI!”

Based in San Francisco, Hotshot was founded by Sastry and John Mullan. Initially, the startup focused on developing AI-powered photo creation and editing tools but later shifted its focus to text-to-video AI models.

Over the past two years, Hotshot has developed three video foundation models: Hotshot-XL, Hotshot Act One, and Hotshot.

Sastry expressed excitement about joining xAI, stating that the acquisition would enable Hotshot to scale its efforts on the largest cluster in the world, Colossus.

This move is expected to improve xAI's video generation capabilities, competing with other rival models such as OpenAI’s Sora and Google's Veo 2.

Previously, Musk also hinted at the company’s plans to develop video-generating models, which would complement its Grok chatbot platform.

Following the acquisition, Hotshot began sunsetting new video creation on March 14. However, existing customers have until March 30 to download their created videos.